Travel Agent License: Do You Need One? Read This to Find out.
There's a lot of things to think about when you're starting up your travel agency—a name, a niche, how to find clients. One day, it dawns on you, do you need a travel agent license? Is there even such a thing as a travel agent license? How do you get one? Here's the quick answer to your question: Depending on what state you live in — or if you want to sell to residents of states with seller of travel requirements — the answer is yes, you may be needing one.
If you're here looking for the regulations for Canadian travel agencies (and for travel agencies selling to Canadians), we've updated that info and gave it some of its own real estate in this article up yonder.
A Travel Agent License in the United States
When we're discussing an agent in the United States and talking about a travel agent license, what we're referring to is really just the government red tape (ahem, and fees) of registering your travel agency. It has nothing to do with training or testing of your travel agent knowledge. You fill out some forms, pay a fee, and get a seller of travel number.
On the national level, you don't have to worry. The US government isn't looking to cash in on travel agencies through registration/licensing fees. Whew!
The travel agent license thing changes a bit when it comes to the state level. Drat.
In the US, there are 5 states that have Seller of Travel Laws, i.e. a travel agent license. Before I tell you more, be warned you're going to feel overwhelmed by all the fancy red tape and bureaucratic hoops to jump through—don't worry, it's natural! As with anything, there's a general miserableness that accompanies government paperwork and legalese. Remember, it's temporary.
We'll start by taking a high level look at things with our infographic, and then we'll start diving deeper into the nuances and intricacies at the state level. Sound good? Alright, let's go!
A Visual Pleasing Way to Look at Seller of Travel Laws
States that have Travel Agency Licenses
The Big Five SOT States® (Note: Don't you think a fake trademark is necessary on such a catchy term? Looks way more professional.)
- California Seller of Travel
- Florida Seller of Travel
- Iowa Seller of Travel
- Washington Seller of Travel
- Hawaii Seller of Travel
If you're located in any of the states above OR if you are planning to sell to residents of those states, you need to be familiar with the requirements.
The thing to know about The Big Five SOT States® is that they aren't just contained to state lines. If you live in New York but you're booking a client that lives in one ofThe Big Five SOT States®, guess what? You're expected to comply with the Big Five laws.
The business does not have to reside in the regulating state, the business could reside anywhere in the world but it would have to comply with California, Florida, Hawaii, Iowa and Washington. — Daniel Zim
Here's a great explanation from Daniel Zim, travel attorney1:
"The SOT for California, Florida, Hawaii, Iowa and Washington apply to any agency that does business with residents of those states. They are extraterritorial laws meaning that the law extends far beyond the borders of the state. The business does not have to reside in the regulating state, the business could reside anywhere in the world but it would have to comply with California, Florida, Hawaii, Iowa and Washington."
Quick note on states Not typically cited
The Big Five SOT States® are the ones everyone will always say have SOT laws/travel agency licensing but there's a few I found I think should also be mentioned.
- Delaware: If you're a travel agency in Delaware (scroll to No. 24), you are required to register for an occupational license. The cost is currently $225 USD. It's a bit different than the state travel agency licensing laws above because you only need it if you open a travel agency in Delaware (vs. needing it if you plan to sell to any Delaware residents).
- Louisiana: This state is occasionally mentioned by industry attorneys, but I have a sneaking suspicion someone once mentioned Louisiana had a travel agent license—and maybe they did at the time—and then people keep citing it, without looking into it. I couldn't find travel agencies listed under Louisiana's Professional and Occupational Licenses list, which is where I would think any licensing requirements would be listed. If you know about any Louisiana travel agency licensing, please let me know in the comments!
Travel industry attorneys always refer to The Big Five SOT States® as the Seller of Travel states but rarely mention Delaware or Louisiana. I think it's very clear Delaware travel agencies needs a license and Louisiana-based agencies, well, I think you're probably okay.
Editor's note 9/10/2015: Nevada did have a seller of travel law... then they kept suspending it for what felt like forever (ahem, 6 years). And in July 2015, Nevada's Seller of Travel Law is officially repealed and Nevada travel agents do not need a license to sell travel.
Notes on the California Travel Agency License
California Seller of Travel requirements are ones to pay attention to since they've gone after agencies that don't have their Seller of Travel license. Because they're one of the Big Five SOT States® if your travel agency is located in California or you book clients who reside in California, you may need a travel agency license/ seller of travel number in California.
There were a few SOT law updates made by California in January 2017. The changes have two major impacts:
1. California amped up enforcement on business regulations. This means that not only do agencies need to comply with CA's SOT travel regulation, but they also need to comply with CA business regulations. In short, it means that if you need a CA SOT license, you also need to register for a CA state business ID. If you don't live in CA, you'll fill out the 'foreign entity' form.
2. There are now some travel agencies that are exempt from CA SOT laws. This is great news since the new regulations favor small businesses.
If you meet all of the exemptions below, you do not need your own travel agency license/seller of travel number in California!
- Your business model is: Sole Proprietor, single-member LLC, or single-shareholder S Corp.
- You have a written contract with a host agency (that has a CA SOT).
- You are selling through your host, with your host's accreditation number.
- You use your host's accreditation for all bookings (no booking direct and bypassing the host).
- All fees (consultation/service fees) must be processed through the host agency.
- Clients must pay host or supplier directly. (No taking cash. Checks would need to be made out to the host agency.)
- You must disclose to every sale that you belong to a host, including the host's name, address, phone number and registration number.
It's confusing. Don't be afraid to contact their office for clarification.
- Email: Sellers.Travel@doj.ca.gov
- Phone: (213) 897-8065
And one last thing. If your principal place of business is in California, you will need to participate in the Travel Consumer Restitution Fund (TCRF). If your principal place of business is outside of California, you're off the hook when it comes to the TCRF, unless you're a nationally traded company.
I lied. One more thing. :)
According to travel attorney Mark Pestronk, "If you sell only resorts and all-inclusives but not air travel or cruises, you do not fit the definition of a "Seller of Travel" under the California law, so you do not have to register or worry about being exempt."2 I believe this stems from the way a Seller of Travel is defined in the CA code (statute #9), which exempts hotels/motels/lodging when it's not accompanied with other products.
Notes on the Florida Travel Agency License
Since Florida is a member of our Big Five SOT States®, we know that Florida's travel agency license/ Seller of Travel law applies to any travel agency who books clients residing in Florida, regardless of the agency's location, right? [In unison: "Yes, Steph."]
You're doing so great!
If you know you need a Florida SOT number, the cost is $300/yr, unless you're an ARC accredited agency for 3+ years under the same ownership, then you'd file for an exemption. And for all you active duty military, honorably discharged veterans, military spouses or surviving spouses (thank you for your service!), you may be eligible for a waiver of the registration/renewal fees (see section 2(c) for requirements). Here's the military fee waiver request form.
Beyond the $300, travel agencies also need to provide a $25,000 Surety Bond. But good news! For those of you with a clean track record, you can also fill out a Security Reduction Application which would bring the bond amount down to $10k-20k, depending on your sales. And if you've got a clean record and 5 or more years of operating in the state of Florida, you can file for a complete waiver of the bond requirement (waiver form is in the registration/renewal application).
Now, let's add the complication that if you're an independent contractor with an host agency, can that independent contractor use the host's seller of travel number?
If you meet ALL of the exemptions below, you can use your host agencies travel agency license / Seller of Travel number, but you must fill out the Independent Agent Statement of Exemption Form ($50/yr):
- You must be with a host agency that has a FL Seller of Travel number; AND
- Have a written contract with the seller(s) of travel listed above (you'll provide them a copy of the contract); AND
- You do not accept fees (service/consultation/etc), commission or other valuable consideration directly from your clients (they must go through your host agency); AND
- You do not have unused ticket stock in your possession; AND
- You do not have the ability to issue tickets, lodging or vacation certificates, or any other travel documents.
Notes on the Hawaii Travel Agency License
Again, Hawaii is one of our Big Five SOT States® so if you're working with clients who live in Hawaii—even if your agency isn't in Hawaii—you'll need a Hawaii travel agency license/ seller of travel number.
There's a few key points to know about Hawaii's travel agency licensing:
- If you're selling stand-alone activities to your clients, you technically also need an Activity Desk license.
- Similar to the CA SOT laws, regardless of where you live, you'll need to register your business in Hawaii if you are an LLC, LLP, Corporation, or Partnership. (Out of state agencies will register as a foreign entity.) Here's the current business registration fee schedule.
- And this last one is the most challenging. Travel agencies need to have a business bank account with a bank located in Hawaii. Stay tuned on that one though, because we've got a workaround below
One of our awesome Hawaii-based readers gave us the scoop on Hawaii's travel agency licensing/ seller of travel laws—thanks for your sleuthing, Mara Kunkel! In addition to registering for a seller of travel license, Hawaii has regulations about opening a client trust account. But thanks to Mara's sleuthing, we've learned that Hawaii agents who want to go with a mainland host can apply for a waiver, assuming the agent is not handling any of the clients' money—no cash, no checks—directly.
Hawaii agents with mainland hosts can qualify for a trust account waiver only if they do not handle client monies. Similar to CA, all client money needs to go through the supplier or the host agency. If this is up your alley, you can include that information in a letter and asking for a trust account waiver along with your application for Hawaii's SOT.
The Hawaii travel agency license costs $215/yr on the even-numbered years and $146/yr on the odd-numbered years (weird, I know).
Notes on the Washington Travel Agency License
When it comes to Washington's travel agency license/ seller of travel laws, it's going to sound awfully familiar. Of course we have the start with the same base as the other Big Five SOT States®—you'll need the license not only if your agency is in Washington state, but if you service clients who live there.
And like Hawaii and California, Washington wants to know who owns your agency so they require proof of business registration. But unlike Hawaii and California, if your agency is located outside Washington state, you can send proof of business registration in your home state. Hurray for small victories!
And here's a new twist: If you hold payments for travel for more than 5 days, you'll need to do 1 of 3 things:
- Open up a Seller of Travel trust account (business account) at a bank in Washington state.
- Purchase a Surety Bond (the size of bond is based on the previous years sales).
- Be a member of good standing in a professional association approved by the Department of Licensing, through which you get both a $1,000,000 errors and omissions policy and a surety bond of at least $250,000. What associations offer that, I honestly have no idea...
As for independent contractors (ICs) and if they can use their host agency's Washington seller of travel number, that depends. If the IC meets the following criteria, they can use the host's Washington travel agency license number3:
- The host agency has a Washington Seller of Travel number and has the IC registered under their number.; and
- The IC is conducting business using the name of the host agency; and
- No money goes through the independent contractor. All money is collected in the name of the host agency and is process by the host agency (no collecting cash, no checks made out to your agency, service/consultation fees would need to be charged under the host agency's name).
The bottom line on the host/IC situation? Since most ICs sell travel under their own brand, they will have to get their own Washington travel agency license.
Plan on the Washington seller of travel licensing setting you back $202/yr.
Notes on the Iowa's Travel Agency License
The one big question I want to know is how in the world does Iowa make money on their seller of travel program? At $15 a pop, I would think it costs more to print and file the applications than its worth. But to each their own. :) I don't think you have to worry about the pricing going up either as it's written into the law that "The registration fee shall be established at a rate deemed reasonably necessary by the secretary to support the administration of this chapter, but not to exceed fifteen dollars per year per agency." Midwest frugality at its best! (I'm from MN so I can say this confidently.)
Beyond the absurdly low pricing, things to take note of with Iowa's travel agency licensing is that you need to provide one of these items with your application:
- $10,000 Surety Bond or Letter of Credit
- Proof of $1M Errors and Omissions policy
- Be an ARC accredited agency
The one thing that isn't clear with Iowa's Seller of Travel program is if a hosted agent is covered under their host agency. This is the only wording we're given to work with, "A travel agency doing business in this state before July 1, 2020 shall register with the secretary of state as a travel agency if it or its travel agent conducts the solicitation of an Iowa resident." It's tough to say if "its travel agent" means employees only or include independent contractors booking under the agency. With the program's budget, not sure we'll get an answer to that anytime soon!
In the beginning, we said there are no travel agency licensing laws on the national level. Then we zoomed in on the state level, where we had The Big Five SOT States® (Florida, Iowa, California, Washington, Hawaii) with seller of travel/ travel agency licensing laws. Now let's talk about on the city level.
Breaking down regulations to the city level is complex. The local level is going to involve some research on your end. What you'll want to do is familiarize yourself with local laws that affect travel agencies. While you're digging around, ask your local Chamber of Commerce if there are any general business regulations in your city that you should be aware of.
If you don't know where to start to find out more about local laws, contact your Chamber of Commerce or visit our resources page to find your local SBA or SCORE office.
Did We Mention Travel Insurance Licensing... and Waivers?
Yeah. We have more info and regulations for you. Boring, confusing, and frustrating... but very important. Find out more on travel insurance licensing for travel agencies.
Most travel agencies have a travel waiver for their clients. See what other agencies are including in their travel waivers and download a free sample travel waivers and an Oversea Travel Tips & Checklist.
Save Some Money on a Travel Agent License with a Host Agency
Since the site focuses on host agencies, it's important to mention another host agency benefit—saving you money on your travel agency license. In some states, you can use your host's Seller of Travel number instead of purchasing your own!
For instance, in Florida, independent contractors that are exempt don't have to pay the full $300 annual registration fee for a Florida Seller of Travel number. Agents with a host can go under their host's Florida Seller of Travel number and pay only $50/yr - a savings of $250. 😊 And now hosted agents that meet the criteria for exemption can be under their host agency's California Seller of Travel number — a savings of $100/year.
Check with your host agency or the state's seller of travel office for details. If you're interested in finding a host agency, visit our host agency list and reviews.
It's hard to find info on a travel agent license. Try googling 'Iowa Seller of Travel'. Trust me, it's not easy to find the right page! I wrote this article to save agents time and money. If it helped you out, please drop us a line in the comments or share the article—doing so makes it easier for others to find this page.
Photo Credits: Brandi Carolyn
- Sorry, we need an obligatory disclaimer. I am not an attorney (but here are some travel attorneys!). I aggregated this info from first-hand experience and other industry sources to create a resource for those looking into a travel agent license. All info is accurate to my knowledge but information given should be fact-checked and never be considered legal advice. ↩
- https://www.travelweekly.com/Mark-Pestronk/Seven-requirements-for-exemption-from-Calif-registration-law ↩
- 5(a-b)https://app.leg.wa.gov/RCW/default.aspx?cite=19.138.100 ↩